‘We’ve Got a Real Problem Here’: Parkinson Warns SNF Operators Could Face Medicare Funding Cuts

Skilled nursing operators may soon face disastrous Medicare funding cuts, American Health Care Association President and CEO Mark Parkinson warned on Thursday.

The Centers for Medicare & Medicaid Services (CMS) is expected to release its latest proposed payment rule for skilled nursing providers in the coming weeks. While the nursing home sector has successfully fought against similar cuts in the past, the head of the nation’s largest lobbying and trade group indicated that this year’s effort will be different – and even more critical – than ever before.

“The tea leaves are indicating that we’ve got a real problem here. So we’re working as hard as we can to make the best possible case that nursing homes have never been in a worse position and this would not be a good time for a cut,” Parkinson told Skilled Nursing News during a virtual event hosted by the news organization on Thursday.


Parkinson pointed to the federal government’s comments on possibly recalibrating the industry’s relatively new Patient-Driven Payment Model (PDPM) after determining the model increased payments to nursing homes by about 5% in fiscal 2020, for a total gain of $1.7 billion.

“Some analysts, including CMS, believe that we’re being overpaid,” Parkinson explained.

Before the end of 2021, the Medicare Payment Advisory Commission (MedPAC) recommended a 5% cut to the base payment rates for nursing homes in fiscal year 2023.


The recommendation – which in part was informed by what MedPAC called “rebounded” industry transactions – was met with groans from providers and leaders in the sector, though it was not entirely unexpected.

Parkinson, in his comments Thursday, hinted that the backlash CMS faced when the $1.7 billion increase was announced could put pressure on the agency to pursue cuts as PDPM was “supposed to be” budget neutral.

While the nursing home sector has made significant gains in the past two years, its recovery from the COVID-19 pandemic continues to this day.

Prior to the pandemic, nursing home occupancy was at around 80% and at its lowest point – in December 2020 – the sector fell to 67%, according to Parkinson.

“We gained 6% of that back in the first six months of 2021,” Parkinson explained. “We were making a nice steady recovery and were on a trajectory that looked like we were going to be recovered by the end of 2021 before delta hit.”

Following the emergence of the delta variant, the industry’s occupancy didn’t decline but it also didn’t improve much over a seven-month span.

“That was really painful to be at 73% for seven months in our recovery,” Parkinson admitted. “Over the last four weeks we’ve seen a 1% increase so we’re at 74% but I would say we have at least another year in order to recover.”

With occupancy still down and staffing shortages forcing some facilities to close, Parkinson thinks cuts could spell disaster for the sector, and he plans to press policymakers on that in the coming months.

Why this year is different

While Parkinson admitted the MedPAC recommendation was not much of a surprise, he thinks it may be more difficult to talk CMS out of it this time around compared to previous years.

“It’s not uncommon for MedPAC to propose that we should get a cut and we’re pretty used to being able to convince CMS policymakers that they shouldn’t do that … this year it’s going to be really hard,” he explained during the webinar.

MedPAC recommended similar cuts for nursing homes in 2020, but CMS did not follow the recommendation at the time.

While Parkinson does not know what CMS will ultimately propose, he said the industry needs to brace for “the very strong possibility” that cuts are coming.

A 60-day comment period will follow the proposed payment rule announcement after which CMS will issue a final rule with new payments going into effect in October.

The current situation reminded Parkinson of what happened in 2011, the last time the sector had a sizable change in its payment model following corrections to the former Resource Utilization Group (RUG) system.

“That first year we were overpaid by 12%, according to CMS,” he said. “And they completely cut it the next year.”

He described the move as a “huge jolt” for the sector as publicly traded companies got cut in half and the real estate investment trusts were “eviscerated.”

“It was a really tough time,” Parkinson said.

It was during this time that HCR ManorCare – which was eventually acquired by ProMedica – began to fall behind on its rent payments, eventually leading to it filing for bankruptcy.

“We thought as we entered 2020 that we’re going to have a big battle on our hands over PDPM and whether it’s budget neutral and then the pandemic occurred,” Parkinson explained.

“Now fast forward to where we are today and now they’re saying they aren’t sure they can let it go anymore,” Parkinson said.

Lobbying Congress

Parkinson told SNN that he’s had multiple positive meetings with several federal government officials throughout this week, including CMS Administrator Chiquita Brooks-LaSure and HHS Secretary Xavier Becerra, along with several nursing home providers.

“They need to hear what’s really happening in the buildings from providers,” he said

He said providers of various sizes met with Brooks-LaSure specifically to discuss current labor challenges the industry faces, and how that has impacted industry recovery as they remain committed to quality.   

Parkinson said the group has a meeting with a top White House official on Friday. It’s part of the association’s strategy to speak with as many government officials as possible about the struggles the industry faces leading up to AHCA’s congressional briefing in June.

Parkinson doubled down on his comments that this year’s congressional briefing will be among the most important in the sector’s history. He also thinks the timing of it is “perfect” in more ways than one.

“We hope to have 500 to 600 providers in D.C. and they will go up to Capitol Hill to meet with their members of Congress and one of our primary asks will be to weigh in with CMS, HHS and the administration on our payment, so the timing for that whole effort is absolutely perfect,” Parkinson explained.

On top of that, the extension of the public health emergency, which Parkinson is hopeful will be extended in the next couple of weeks, would possibly be up for renewal again in mid-June, shortly after the AHCA event.

No quick solution for staffing

Parkinson also met with House Speaker Nancy Pelosi on Tuesday and Senate Majority Leader Chuck Schumer to discuss industry funding, and arguably the most critical issue the sector presently faces: staffing.

He said during the webinar that he indicated AHCA would start “pounding away” and “planting the seeds” for more comprehensive immigration reform to bring in additional nursing home workers from overseas.

“Immigration reform would be one of the things that could help us more than anything else [when it comes to staffing],” Parkinson said. “There are millions of people that want to come to the US and work, it would help on so many different levels.”

While Parkinson plans to start “making noise” once again on immigration, he admitted reform likely won’t happen given the current partisan divide in Congress.

AHCA pushed for lawmakers to amend the country’s current immigration visa prioritization to consider prioritizing the entry of foreign-trained nurses and health care workers into the U.S. prior to the end of 2021.

“We have shifted our focus to the administration and there are things that the administration can do that can speed up people that have already been approved to come over,” he said. “This doesn’t solve the macro problem of being 238,000 short but there are thousands of RNs … that haven’t been able to get their interviews because of COVID.”

He said he keeps “pounding away” to see that process become more streamlined.

Curbing skyrocketing agency costs has been another strategy AHCA has advocated for as a way to help with rising staffing costs, though progress has been slower than expected, Parkinson said.

“I’m really surprised that as I talked to providers, they haven’t seen any relief from agencies,” Parkinson said. “I would have thought that by now we would start to see a decline in these prices but that hasn’t happened.”

Parkinson remains hopeful that just by bringing attention to it on the federal level will have an impact.

“We’re not going to get a law passed at the federal level,” he said. “But I think that there are a handful of states that may pass laws that will restrict how much agencies can charge.”

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